The Effect of Performance Appraisal on Employee Performance

 


Introduction

 

A performance appraisal is a regular periodical review of an employee's job performance and overall contribution to a company. A performance appraisal evaluates an employee’s skills, achievements, and growth. Companies use performance appraisals to give employees big-picture feedback on their work and to justify pay increases and bonuses, as well as termination decisions (Hayes, 2021). Performance appraisal can provide an indication of areas of training need as well as direction for leadership development, performance improvement and succession planning Richards, 2021).

 

Benefits of a performance appraisal

Companies use performance reviews to evaluate and assess the performance of individual employees on the job. Performance appraisals are used to explore each employee's job growth and to set goals and benchmarks to strive for during the next appraisal period. Understanding the benefits of performance appraisals can help managers and supervisors make the best use of them (Richards, 2021).

 

Ø  Help to recognize the abilities and competencies of an employee and also helps the company to find out how an employee’s abilities can be used and improved for future growth and development

 

Ø  Identify the quality of the performance, set of expectations of both employee and the employer from each other and also provide an opportunity to work upon weak areas that can be improved

 

Ø  Identify the type of training requirements needed by the employees in order to improve them

 

Ø  Communication channel between the management and the employees giving them an opportunity to speak their minds out


Ø  Help to identify the potential and other areas of expertise of the employee, which can be useful for the organization providing them the chance to explore more

 

In global context, Cargill, the global agricultural producer and distributor, implemented “Everyday Performance Management” to making teams responsible for the daily operation. Everyday Performance Management received overwhelmingly positive results, with 69 percent of employees saying they received feedback that was useful for their professional development. In addition, 70 precent felt valued as a result of the continuous performance discussions with their manager. Instead of spending hours on the tedious paperwork associated with annual reviews, employees could focus on goal accomplishment, future plans and having fruitful conversations with colleagues. (Maier, 2017)


In Sri Lankan context, national digital service provider is practicing performance appraisal annually and semiannually. Based on the set target beginning of the year, employees need to do self-evaluation based on their KPI achievements followed by supervisor and the chief officer evaluations respectively. Final performance grade from 1 to 5, where 5 is far beyond the expectation leads to all financial compensation including salary increments and promotions.

 

Conclusion

Performance appraisal has a positive effect on employee performance including productivity, satisfaction, engagement and morale of the employee. This helps employee’s personal development and finally organizational success.

 

Reference

Heyes, A., 2021. Investopedia. [Online]
Available at: https://www.investopedia.com/what-is-a-performance-appraisal-4586834#:~:text=A%20performance%20appraisal%20is%20a,growth%2D%2Dor%20lack%20thereof.
[Accessed 29 April 2021].

Maier, S., 2017. CMS WiRE. [Online]
Available at: https://www.cmswire.com/digital-workplace/how-3-companies-benefited-by-changing-performance-management/
[Accessed 29 April 2021].

Richards, L., 2021. Chron. [Online]
Available at: https://smallbusiness.chron.com/effects-performance-appraisal-organizational-performance-1762.html
[Accessed 29 April 2021].

 

Comments

  1. Ruwan HerathApril 30, 2021 at 5:08 AM

    Performance appraisals serve as a motivational tool. Through evaluating the performance of employees, if the targets are achieved, a person's efficiency can be determined. This motivates a person to work toward perhaps a better job, and helps him or her to improve performance in the future.

    ReplyDelete
  2. Vishwa RathnayakeApril 30, 2021 at 11:10 PM

    As explain in the blog article , the system of appraisal helps the organization to identity key performing resources and also highlight areas of improvement . Overall organizational performance can be positively influenced .

    ReplyDelete
    Replies
    1. Nuwan BuddhikaMay 1, 2021 at 9:31 AM

      Totally agree with you. Thank you Vishwa for your valuable comment.

      Delete
  3. R SAJEEVMay 1, 2021 at 9:54 AM

    The success of a business often depends on its employees. If they are highly motivated to succeed and are productive in their tasks, the company has a better chance of reaching its goals. Managers and business leaders need to provide constructive feedback to employees on their performance so that they know where they stand and which areas they need to improve. Performance appraisals have a number of positive effects on employees and the entire business. Author explained it well.

    ReplyDelete

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